Ethical Dilemmas Faced by Multinationals - Essay Example

Multinational companies are firms that operate beyond their country of registration to foreign countries with different laws, norms and cultures, diverse values, and ethical practices. Many times these corporations find themselves in challenging situations about the customs of the host country. What could be termed moral in one’s country may be termed unethical or contrary to customs in another country. In such respect, what composes ethics depends on where a firm is carrying out its activities. Ethical dilemmas arising include; Dilemmas arising from equating standards in the home country with morally necessary standards (Malachowski, 2001). Critics argue that corporations should exercise similar standards to host nations as those implemented in the country of registration. Global corporations conduct extensive due diligence when awarding contracts to firms operating in home countries. However, this is not the case when they move abroad; they conduct shallow or no due diligence as in the case of Walmart contracting Simco to manufacture girls’ shorts. Walmart failed to conduct adequate research before approving the subcontracts thoroughly, thus allowing a blacklisted factory to manufacture its products. It is morally unethical and wrong to recruit individuals to work in an unsafe work environment. Tazreen fashion garment factory was negligent in their risk analysis factors which were unethical for the factory and multinationals such as; Faded glory, Wal-Mart, and Sears whose labels were found at the factory.

Utilitarianism and Kantianism: Definition, Distinguishing factors, and Ethical concern about the Case Study
Kantianism is based on Kantian standards that state that the action is only good if it is out of duty. Kantian theory suggests that humans are defined by their rationality and autonomy. Developed by Immanuel Kant, the theory states that good intentions of action are better than their outcomes. Duty precedes desire. Kantian ethical senses are rigid, they are not flexible to moral action. The Kantian theory has been criticized as undesirable to the greater good because it promotes the idea that when individuals act immorally, they want everyone to follow suit, but make an exemption for themselves. Utilitarianism was suggested by Bentham and elaborated by John Stuart Mills; it states that the outcome of an event is more important than the motivation as long as the greater good is. The theory judges the action or event in general. Utilitarianism is flexible, unlike Kantianism, it allows the comparison of different scenarios and different approaches and alternatives. Actions compete against each other until the best possible is e.g. cost-benefit analysis is an example of utilitarianism. Utilitarianism also provides a solution to moral conflict. Kantianism and utilitarianism give a moral justification and not the process of how to go about decision-making. The case study shows the various aspects of Kantianism, Wal-Mart and other multinationals whose labels were found in the ruins claimed that they had severed their relationship with the factory and were unaware that their labels were being manufactured there. Multinationals fail to respect human dignity; people jump from upper floors and die in the process of fleeing from the fire. In the utilitarian sense, the corporations should have heeded the constant warnings of the dangers exposed to workers in Bangladesh and publicly denounce them.

Ethics in Practice: Wal-Mart terminates contract with suppliers
Walmart overvalued its decision in terminating suppliers’ contracts, future engagements had to be supported by safety audits, training, and collaboration with government officials. Wal-Mart also donated funds to put up a training academy. However, products were overvalued and thus transferred the costs to the consumer because suppliers had to compile annual safety reports.

Wal-Mart was ethical in terminating the contract. Ethical principles state that multinationals should do no direct or indirect harm, produce more good than bad for the host nation, respect human rights, and cooperate with local government. Walmart had dealt with suppliers who had violated the principles above thus ethics were in practice in terminating the contract.

Is Wal-Mart's case Shared value or corporate study?
Shared value creation surpasses corporate social responsibility. Creating shared value involves policies and techniques that a firm incorporates to enhance its competitiveness and at the same time promote the economic and social aspects of the society, within which the business carries out its activities. CSV plays an integral role in a firm’s profitability and competitiveness over its rivals. Corporate social responsibility is the activities carried out by a firm to assist the surrounding community in the area of operation. CSR is more of a publicity case, the firms want to create a good image and retain a good reputation among consumers.

Creating shared value is more expands the entire pool of economic and social value. It builds on strategies to support suppliers and other organs that drive the business and mitigate any harm that might be caused by the business. Creating shared value bores productive coexistence between the business and the community. Read More